Fuel Price Crisis: Remove Subsidies but Refine Oil in Nigeria

Published on 10th January 2012

The Nigeria fuel price crisis is a consequence of leadership that does not prioritize the interests of its people. For a long time, Nigeria has played a key role in satisfying energy needs of wealthy nations at the expense of her own. As of 2007, Nigeria produced 2,451,000 barrels and consumed only 290,000 barrels of oil per day. The increased energy needs of a country that has experienced a surge in car imports, generators and demand for electricity as its middle class expands - calls more for sealing existing loopholes than opening new ones.

President Goodluck Ebele Jonathan’s government ought to first get rid of the fuel supply cartels that have kept Nigeria on generators instead of a reliable national electricity grid system. The government should scale up its domestic oil refining capabilities to bring the cost of oil down before it removes subsidies. An estimated 80% of production of goods and services rely on electricity produced from generators; not to mention the noise, and the smoke pollution that comes along with this package.

As an oil producing country, Nigerians do not expect subsidized oil but rather cheap oil through activating oil refineries to supply domestic demand. The current low costs of petroleum products could actually have been 100% lower if Nigeria was refining the crude domestically. The argument that savings made from removing oil subsidy will assist in financing other essential infrastructural demands fails to address aspects of inefficiency on how oil revenues are managed and what measures have been put in place to curb revenue mismanagement at all government levels. Why should ordinary Nigerians be made to pay for the gross ineptitude, and grave incompetence of their government?

It is clear that Africa's elder brother is reeling from lack of pro-national interest policies; inherited inefficient structures; gross socio-political and economic mismanagement; and succumbing to external influences. There is always an elastic limit to the level of tolerance of a people burdened by economic hardships. The sudden hiking of fuel prices is capable of pushing Nigerians beyond that limit. Produce oil for Nigerians; fix refineries; use oil export revenues to put up an efficient electricity grid system; seal revenue leakages and you may never need to subsidize fuel prices.


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